India’s Urea Imports Jump 120% During Apr–Nov: FAI

The latest data from the Fertiliser Association of India (FAI) for the period April–November 2024–25 shows that urea imports jumped 120.3% to 7.17 MT (million tonnes), compared with 3.26 MT in the year-ago period.

This surge coincides with a 3.7% decline in domestic production. During the same period, the domestic production fell to 19.75 MT.

There is a visible production dip, but the overall sales have witnessed growth by 2.3% to reach 25.40 MT.

This shows the agricultural demand resilience in India. In Nov alone:

• Imports jumped 68.4%, reaching 1.31 MT.
• Urea sales increased by 4.8% to 3.75 MT.

Other soil nutrients also followed similar trends. Di-Ammonium Phosphate (DAP) import dependence rose to 67% from 56%. Also, the domestic DAP production contracted by 5.2% to 2.68 MT.

Meanwhile, complex NPK (nitrogen, phosphorous and potassium) imports nearly doubled to 2.72 MT. This was despite the Single Super Phosphate (SSP) sales offering a domestic bright spot with a 15% growth to 4.16 MT.

The urea prices have held at ₹242/bag since 2012. So, the question for the investors is: how will the widening gap between global procurement costs and domestically subsidised prices impact the fiscal deficit over time?

The Intensifying Structural Shift Towards Imports

India’s priorities of managing its nitrogen and phosphorus requirements are changing. This shift is evident from its current fertiliser market trend.

The necessity of maintaining an uninterrupted supply chain during peak sowing seasons is currently driving the momentum. The demand is higher despite the domestic manufacturing facilities facing operational constraints and feedstock challenges.

There is also a strategic dependence on foreign shipments, ensuring that agrarian productivity is not burdened by local shortfalls.

However, the imports are exposing the domestic market to volatile global commodity cycles and freight costs.

The aim of food security is gaining importance with the import-driven soil quality maintenance. Here, the immediate availability of soil nutrients is taking centre stage over immediate self-sufficiency goals.

But it is important to ensure that the external supply chain dependence is not just a temporary fix. It should be seen as a structural adjustment to bridge the manufacturing gap instead.

This situation calls for a closer look at the efficiency of the existing supply chain and the strategic reserves the GoI (Government of India) maintains.

Furthermore, there is also a rising dependence on imported nutrients like DAP. This suggests that the challenge is widespread across the entire fertiliser space.

Are Indigenous Phosphatic Fertilisers Sustainable?

In India, there is a heavy dependence on imported urea and di-ammonium phosphate.

The sector is witnessing rising farmer confidence in homegrown alternatives (such as single super phosphate). Farmers can produce these alternatives with better quality control and competitive cost structures.

Thus, the industry’s capacity to deliver essential nutrients using local resources is potentially reducing the strain on the foreign exchange reserves in the long run.

Furthermore, with the rising use of complex NPK fertilisers, the market is moving towards a more balanced nutrient profile. This is a boon for long-term soil health and sustainable agricultural yields.

There is also a rising emphasis on data-driven planning and a focus on nutrient use efficiency. Improved agronomic data and targeted application can significantly optimise chemical input consumption. So, the industry is moving forward, but the focus will likely remain on optimising the quality and accessibility of the local nutrients to further reduce the import burden.

The Volatile Global Market

The gap between the falling domestic production and surging imports is widening. Now, the focus is increasing on the GoI’s subsidy mechanism.

Urea has remained a controlled commodity with a fixed price point. So, the financial impact of higher global procurement costs is borne almost entirely by the exchequer (national treasury).

The long-term solution lies in bridging the production gap through modernising existing plants and encouraging fresh investments in high-efficiency technologies.

Sources:

The Hindu BL
Business Standard